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New lending takes a $1.41 billion dive, amid record refinancing

New lending takes a $1.41 billion dive, amid record refinancing

The value of new home loans has fallen by $1.41 billion to $30.97 billion in June, as property prices in key capital cities fall.

According to the ABS lending indicators for June, released today, owner-occupier lending fell $707.4 million – a 3.3 per cent drop – from the previous month, in seasonally adjusted terms.

Investor lending also dropped by $707.0 million, down 6.3 per cent, this month, however, is still up $1.54 billion, or 17.3 per cent, compared to a year ago.

Value of new home loans approved in June

ValueMonthly changeYear-on-year change
TOTAL

$30.97 billion

-$1.41 billion

-$624.9 million

-4.4%

-2.0%

Owner-occupier

$20.50 billion

-$707.4 million

-$2.17 billion

-3.3%

-9.6%

Investor

$10.48 billion

-$707.0 million

$1.54 billion

-6.3%

17.3%

Source: ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data. Annual change is June 2021 to June 2022. Excludes refinancing.

RateCity.com.au research director, Sally Tindall, said: “The value of new home loans will likely continue to fall as the property market cools.”

“Many people who were looking to buy homes have put their house-hunting plans on hold and are waiting for prices to drop further before jumping in,” she said.

Other key June ABS lending indicator statistics out today:

  • The value of external refinancing hit a record high of $18.16 billion in June.
  • The proportion of new loans that are fixed plunged to 9%, down from the July 2021 peak at 46%.
  • The number of new owner-occupier first home buyer loans fell 32.2% compared to a year ago.
  • The average new owner-occupier loan size dropped in NSW, Victoria, Queensland and Tasmania.

Refinancing hits record high as borrowers try to combat rising rates

The value of new externally refinanced loans increased by $1.06 billion, to $18.16 billion in June, the highest value on record.

Sally Tindall said: “There has been a surge in borrowers refinancing their home loans, trying to find a better deal to combat the RBA rate hikes.”

“While home loan rates have been rising, many banks are offering sharper rates for new customers, and big cashbacks for borrowers willing to refinance,” she said.

Screen Shot 2022-08-02 at 5.15.42 pm

Source RateCity.com.au, ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data. 

Fixed loans fall further out of favour

The proportion of fixed loans funded in the month of June was just 9 per cent, in seasonally adjusted terms, and comes as banks rapidly hike fixed rates. This includes both new loans and refinancing.

At the peak in July 2021, 46 per cent of all new loans were fixed.

Screen Shot 2022-08-02 at 5.16.30 pm

Source RateCity.com.au, ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data. 

Sally Tindall said: “With the majority of big banks’ fixed rates now starting with a ‘5’ or even ‘6’ borrowers are returning to variable.”

First home buyer lending continues to slide

The number of new owner-occupier first home buyer loans dropped 8.0 per cent month-on-month in June.

In dollar terms, the drop in first home buyer lending was even bigger, down 10 per cent, reflecting property price falls.

Owner-occupier first home buyers in June

AmountMonthly changeYear-on-year change
Number of loans

9,393

-818

-8.0%

-4,455

-32.2%

Value of loans 

$4.49 billion

-$496.2 million

-10.0%

-$1.83 billion

-29.0%

Source: ABS Lending Indicators June 2022, released 2 August 2022, seasonally adjusted data.

Sally Tindall said: “Seeing house prices drop may be a welcome relief for first home buyers who have been all but shut out of the market over the last year because of the surging property prices.” 

“However, first home buyers will also find the amount the bank is willing to lend them has also shrunk and will continue to fall as rates rise, which may again price them out of the market.”

Average new loan sizes fall in NSW, VIC, Qld, Tas

The national average new loan size for owner-occupier dwellings has continued to slide, down 0.86 per cent ($5,265). That said, compared to a year ago, the average new loan size is up $53,830 or 9.68 per cent.

Monthly drops were recorded in NSW, Victoria, Queensland and Tasmania. All other states and territories rose.

Screen Shot 2022-08-02 at 5.17.16 pm

Average new owner-occupier loan size

Average loan sizeChange monthly Change from 1yr ago
Australia

$609,789

-$5,265

-0.86%

$53,830

9.68%

NSW

$766,511

-$14,251

-1.83%

$46,761

6.50%

Vic

$636,799

-$6,268

-0.97%

$60,857

10.57%

Qld

$532,741

-$3,548

-0.66%

$65,258

13.96%

SA

$466,859

$8,324

1.82%

$69,473

17.48%

WA

$481,789

$14,943

3.20%

$50,847

11.80%

Tas

$437,895

-$7,886

-1.77%

$53,147

13.81%

NT

$443,697

$32,967

8.03%

$75,530

20.52%

ACT

$616,361

$16,463

2.74%

$46,413

8.14%

Source: ABS lending indicators, July 2022, original data for owner-occupier dwellings. Includes construction and the purchase of new and existing dwellings.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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